What cuts to the CFPB could mean for consumers

Late last week, a federal judge ordered the Trump administration to continue funding the Consumer Financial Protection Bureau, the government watchdog agency established in the wake of the Great Recession. Since President Donald Trump took office again, the administration has tried to essentially gut the CFPB.

A new investigation by ProPublica, the nonprofit newsroom, published data on what that might mean for the U.S. consumers for whom the CFPB was established to protect. For more, “Marketplace Morning Report” host Sabri Ben-Achour spoke with Joel Jacobs, a data reporter with ProPublica. The following is an edited transcript of their conversation.

Sabri Ben-Achour: So, you start the piece with this story of this Colorado accountant, this woman, Rebecca Sheppard. She finds a huge mistake on her credit report: $240,000 in student loan debt that is not her debt. Her credit score plunges. She tries to get the three credit reporting companies to fix this. What happens?

Joel Jacobs: First, she tries to go to the credit bureaus directly, and then she’s basically rebuffed. Then she tried to go through the CFPB’s complaint system. And the company, in this case, the credit bureaus — the big three: Equifax, TransUnion, and Experian — they’re required to give a response within 60 days. But in her case, and in many other cases, it did not resolve her issues. And she even actually disputed a fourth time via certified mail, and in that case, the response she got from TransUnion was a postcard in the mail saying they didn’t think the dispute came from her.

Ben-Achour: This is part of a bigger pattern that you found, yeah?

Jacobs: It’s not very transparent what happens when you go directly to a credit bureau. They don’t release public statistics on how often they fix a credit report in response to a direct dispute. But we do have some data when somebody does go through the CFPB and complains. And so that’s what we looked at, right? And we saw that basically two of the three big credit bureaus, that would be Experian and TransUnion, they really substantially dialed back how often they provide relief, which is a term in theory that means they made some kind of change to someone’s credit report in response to a complaint.

Ben-Achour: What do the credit bureaus say when you bring this up with them?

Jacobs: Right. So, the credit bureaus really say that the complaint system, and potentially their disputes as well, are flooded with third-party credit repair firms. You know, many illegitimate complaints. People listening to social media influencers online and trying to contest everything that’s on their credit report that’s negative, even if it’s accurate. And while those third-party complaints certainly do exist and bad actors do exist in the credit repair space, they are potentially labeling some of these more legitimate complaints also as coming from third parties.

Ben-Achour: What about the CFPB? What did they tell you about their enforcement and oversight?

Jacobs: A spokesperson did say that, basically, the complaint system was being flooded with bot submissions, and that their efforts are basically focused on trying to clear that out so that legitimate consumers can get help. I will say, though, at the same time, the CFPB is fighting in court for basically the right to fire 90% of its employees. So, I think there is kind of a broader question, though, of if they do end up going through with those kinds of mass firings, who will maintain the database? Who will oversee? And obviously, if there’s no pressure of oversight, or enforcement, or examination, how responsive will companies be to the complaints that come through?